President Xi Jinping has announced that China would set up a financial stability committee under the State Council to be responsible for the coordinated oversight of the insurance, banking and securities sectors.
In addition, China’s central bank, the People’s Bank of China, (PBOC) will take on a bigger role managing systemic risk in the country’s financial markets, reported the Xinhua News Agency.
Mr Xi, speaking at the National Financial Work Conference which was held on 14-15 July, said: “We will strengthen the PBOC’s role in macro-prudential management and in averting systemic risk.”
The different financial regulators in the country include the China Insurance Regulatory Commission, the China Banking Regulatory Commission and the China Securities Regulatory Commission.
The central government would increase the accountability of regulators and the supervision over regulatory bodies. Mr Xi called it a “dereliction of duty” if they fail to spot and dispose of risks in a timely manner, and stressed that coordination of financial regulation should be improved, and weak links in supervision strengthened.
He called for stronger financial regulation to contain risks. China will accelerate developing laws and regulations governing the financial sector, improve macro prudential management and emphasise functional as well as behavioural regulation, he said.
The government will continue to de-leverage the economy by firmly taking a prudent monetary policy and prioritising reducing leverage in state-owned enterprises, he added.
China will control local government debt growth, crack down upon financial irregularities and improve supervision on Internet finance.
The conference has been convened every five years since 1997 and is closely monitored as it sets the tone for financial reforms.
The conference is of particular significance this year because the authorities have embarked on an anti-corruption drive targeting the financial sector. This has already snared several billionaires and senior government officials including Xiang Junbo who was detained and removed from this post as CIRC Chairman earlier this year.
The CIRC, which has admitted to gaps in its supervision of insurers, has been cracking down on risky activities in the sector since last year, including taking action against Anbang, one of the country’s top 10 insurers in terms of premiums, for its aggressive investments and use of policyholders’ funds. A